Antitrust Claims Against Patent Pool
In a terse non-precedential decision, the U.S. Court of
Appeals for the Federal Circuit affirmed a 2006 district court
order dismissing antitrust claims against participants in an
international patent pool arrangement. The detailed district
court decision concluded that a patent pool for DVD technology
was lawful under the U.S. antitrust laws. Wuxi Multimedia,
Ltd. v. Koninklijke Philips Elecs., Case No. 08-1041 (Fed.
Cir., June 5, 2008) (per curiam).
Two Chinese DVD manufacturers, Wuxi Multimedia and Orient
Power (Wuxi), filed an antitrust class action lawsuit against
the 3C Patent Group (3C), an international patent pool
consisting of technology owned by Phillips, Sony, Pioneer, and
LG Electronics. Wuxi alleged that the defendants violated U.S.
antitrust laws by conspiring through 3C to license patented DVD
technologies at "fixed" prices and conspiring to
monopolize the DVD market.
Prior to the Wuxi proceedings, the Department of
Justice (DOJ) analyzed this specific patent pool in a business
review letter and determined that it would not engage in
enforcement proceedings because the pool did not appear to
violate the antitrust laws and provided substantial competitive
benefits. Offering guidance on the structure of these types of
arrangements, the DOJ business review letter suggested that
patent pools have the following characteristics relevant to the
Wuxi court's analysis of the 3C pool:
include only valid patents (i.e., not expired
patents)
include only essential patents
permit contributors to license technology outside the
pool (i.e., non-exclusive licenses)
Wuxi filed a second amended complaint in 2005 against 3C
alleging various anti-competitive claims such as price fixing,
tying, price discrimination and monopolization. Wuxi sought
damages and a declaratory judgment invalidating the 3C patent
pool. The district court dismissed the complaint with prejudice
in January 2006.
The district court applied the "rule of reason"
analysis to the pool, rejecting Wuxi's contention that the
pool represented a conspiracy unlawful per se under
the antitrust laws. Relying on the Supreme Court's
Broadcast Music decision, the district court held that
the 3C pool creates a new "product" in the form of a
license to pooled technology that has the potential for
substantial benefits. Therefore, the more fact-intensive rule
of reason analysis was the proper framework to address
Wuxi's claims.
Wuxi challenged the pool by asserting, without any
corroborating...
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